Costs & Pricing
Margin & Selling Price Calculator
Starting from your true cost per package, this tool sets a selling price using the pricing approach you choose. Gross margin and markup are two different concepts: margin is the profit percentage of the selling price, markup is the profit percentage added to your cost. The calculator keeps them separate and shows both formulas.
What This Tool Does
It turns your cost per package into a selling price by the method you pick: gross margin, where your profit is a percentage of the selling price, or markup, where your profit is a percentage of the cost. Only one method applies per calculation, so the two never blur together.
Gross margin: Selling Price = Cost ÷ (1 − Margin%). At 40% margin on a $6 cost, the price is $6 ÷ 0.60 = $10.
Selling Price per Package
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Using the method selected above
What the Result Means
The selling price is what you would charge to hit the margin or markup you asked for, based only on the cost you entered. Under a 40% gross margin, $6 of cost produces a $10 price because the $4 profit is 40% of $10. Under a 40% markup, the same $6 cost would produce $8.40 because the profit is 40% of the cost: the two methods give different prices for the same percentage, which is exactly why they are kept separate.
The Formula
- Gross Margin: Selling Price = Cost ÷ (1 − Margin % ÷ 100)
- Markup: Selling Price = Cost × (1 + Markup % ÷ 100)
Important Limitations
- A margin of 100% would mean an infinite price (division by zero), and margins above 100% are impossible: the input is limited to below 100%.
- The price is only as real as the cost. Build the true cost per package with the Cost per Package calculator first.
- Market conditions, competitors, customer willingness to pay and demand are not part of this math: it sets a price target from your cost, nothing more.